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Presentation, discussion and possible action regarding a waiver of 10 TAC §11.101(b)(1)(A)(vii) of the Qualified Allocation Plan (QAP) relating to the percentage of efficiency and/or one-bedroom units for Lofts at Creekview.
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RECOMMENDED ACTION
recommendation
WHEREAS, the Department received a request for a waiver relating to Lofts at Creekview, a proposed 4% Housing Tax Credit application that has not yet been submitted to the Department;
WHEREAS, the unit mix for Lofts at Creekview includes more than 35% one-bedroom units, which exceeds the threshold allowed in 10 TAC §11.101(b)(1)(A)(vii) of the 2025 QAP, thus rendering the development ineligible; and
WHEREAS, staff recommends that a waiver be granted pursuant to 10 TAC §11.207 based on specific factors related to the proposed development and its associated timeline as further detailed herein;
NOW, therefore, it is hereby
RESOLVED, that a waiver of §11.101(b)(1)(A)(vii) of the 2025 QAP relating to the allowable percentage of efficiency and/or one-bedroom units for Lofts at Creekview is hereby approved.
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BACKGROUND
General Information: Lofts at Creekview is to be located in San Antonio, Bexar County, and involves the new construction of 301 units that will serve the general population. The Certificate of Reservation from the Bond Review Board was issued under the Priority 3 designation, which does not require any specific restrictions on rent or income and expires on October 20, 2025. According to the applicant, the development will utilize the income averaging set-aside such that 100% of the units will be rent and income restricted at an average at or below 60% of Area Median Income (AMI).
Waiver Request: Pursuant to §11.101(b)(1)(A)(vii) of the QAP, “any New Construction, Reconstruction, or Adaptive Reuse Development proposing more than 35% efficiency and/or one-Bedroom Units will be considered ineligible. This requirement will not apply to Elderly or Supportive Housing Developments.”
The unit mix for Lofts at Creekview consists of 32 efficiency units, 150 one-bedroom units, 104 two-bedroom units, and 15 three-bedroom units. The number of one-bedroom units comprises 60.4% of the total unit count. The applicant has requested a waiver of the aforementioned rule, so that the development may be eligible without necessitating a change to the currently proposed unit mix.
According to the waiver request submitted, construction of the development was originally financed with the proceeds of essential function bonds issued and sold by the San Antonio Housing Trust Public Facility Corporation in 2022. This financing structure enabled the development to be constructed without the use of Low-Income Housing Tax Credits (LIHTC). Because LIHTC were not utilized, the development did not have to adhere to the requirements of the QAP, and, therefore, was not designed with those requirements in mind. The developer moved forward with closing under this financing structure, and construction began. The development is currently 50% complete.
Due to a myriad of factors, including environmental issues and rising construction costs, the developer has represented that the current financing is not sufficient to continue and complete construction of the development. As a result, the developer has proposed that the development be refinanced using Tax-Exempt Bonds and 4% Housing Tax Credits. However, in order for the development to qualify for 4% HTC, it must adhere to the requirements of the 2025 QAP. The current unit configuration does not adhere to §11.101(b)(1)(A)(vii) of the 2025 QAP, and, therefore, a waiver is necessary. According to the applicant, the current unit mix was supported by a market study at the time the original financing closed and will be supported with another market study in conjunction with the forthcoming tax credit application.
Per §11.207 of the QAP, a waiver request must establish that:
(1) “the need for the waiver is not within the control of the Applicant or is due to an overwhelming need.”
(2) “granting the waiver . . . serves the policies and purposes articulated in Tex. Gov’t Code §§ 2306.001, 2306.002, 2306.359, and 2306.6701, . . . than not granting the waiver.”
(3) The Board does not “waive any requirement contained in statute.”
Based on the aforementioned factors, staff believes that the need for a waiver was not within control of the applicant because the Development was designed without the intent to utilize Housing Tax Credits. The unit mix was supported by a market study that identified the needs of the submarket and was approved by the City of San Antonio. Of the 301 total units, under the original structure only 151 units would have been affordable serving households at a combination of 80% of AMI, 60% of AMI and 50% of AMI levels, while the remaining 150 units were at market rate. In converting the project to utilize Housing Tax Credits, the applicant has indicated that all of the units would be affordable.
Staff believes that granting the waiver better serves the purposes articulated in Tex. Gov’t Code §2306.001(2) by providing affordable housing to meet the needs of individuals and families and §2306.001(3) by contributing to the development of neighborhoods and communities.
Based on the aforementioned factors and timeline associated with the design of Lofts at Creekview, staff recommends that a waiver of §11.101(b)(1)(A)(vii) be approved and that such waiver is specific to the unit mix only. The Development must meet all other Department rules.